Correlation Between Sidus Space and Planet Labs

Can any of the company-specific risk be diversified away by investing in both Sidus Space and Planet Labs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sidus Space and Planet Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sidus Space and Planet Labs PBC, you can compare the effects of market volatilities on Sidus Space and Planet Labs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sidus Space with a short position of Planet Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sidus Space and Planet Labs.

Diversification Opportunities for Sidus Space and Planet Labs

-0.59

Correlation Coefficient

Sidus Space  Planet Labs

Excellent diversification

The 3 months correlation between Sidus and Planet is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sidus Space and Planet Labs PBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Labs PBC and Sidus Space is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sidus Space are associated (or correlated) with Planet Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Labs PBC has no effect on the direction of Sidus Space i.e., Sidus Space and Planet Labs go up and down completely randomly.

Pair Corralation between Sidus Space and Planet Labs

Given the investment horizon of 90 days Sidus Space is expected to under-perform the Planet Labs. In addition to that, Sidus Space is 2.73 times more volatile than Planet Labs PBC. It trades about -0.2 of its total potential returns per unit of risk. Planet Labs PBC is currently generating about 0.47 per unit of volatility. If you would invest  236.00  in Planet Labs PBC on August 27, 2024 and sell it today you would earn a total of  115.00  from holding Planet Labs PBC or generate 48.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sidus Space  vs.  Planet Labs PBC

Sidus Space

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidus Space has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Planet Labs PBC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Planet Labs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidus Space and Planet Labs

The main advantage of trading using opposite Sidus Space and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sidus Space position performs unexpectedly, Planet Labs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Planet Labs will offset losses from the drop in Planet Labs' long position.

The idea behind Sidus Space and Planet Labs PBC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.